There comes a time in every creative’s life when you just have to put it out there and talk about money.
Moolah. Filthy lucre. Wodge. Dough. Call it what you like, but it’s a thorny subject: apart from the fact that we make art/words/images and beautiful work for others to use, cherish and enjoy, we are also operating a business.
When we’re doing well, we’re great at making it rain. The work’s coming in, our order book is full, we’re on form and happy.
But creative freelancers are also vulnerable to the feast-or-famine cycle – this is why getting clients to pay on time (or at all) is crucial to maintaining good cashflow. (And being able to manage mere trifles, like keeping roofs over heads and putting food on tables!)
The little guy has always had problems getting paid: it’s been part of the commercial wallpaper for longer than anyone cares to remember.
In the UK, the Late Payments of Commercial Debts Act came into force in 1998 precisely to stop the pernicious spread of bankruptcy in small business – the construction industry being a case in point. The big guy wouldn’t produce his chequebook, which forced otherwise viable businesses to go to the wall. Naturally, this caused heartbreak and financial ruin for those involved.
The Guardian reported in summer 2014 that up to £40bn in unpaid invoices was owed to small business.
Why is this happening? One reason is that organisations are finding increasingly innovative ways to keep their coffers closed – and their own cashflow healthy – for as long as possible.
Some impose 60 days’ terms on suppliers; others as long as 90 days. (The EU wasn’t exactly helpful in this regard, when in 2013 it brought in a Directive extending business-to-business credit to 60 days.)
In the UK, standard terms are 30 days
In the UK, standard terms are 30 days: invoice and payment within a month. Sixty and 90-day terms can extend that period so, unless a supplier specifically agrees (or indeed, insists) that they’re paid within a month, they can look forward to a two or three-month wait to see their money.
Meanwhile, some simply don’t pay up, even when the supplier chases them. Which can come from a lack of understanding in finance departments that payment for services does not mean boosting another company’s profit. If that supplier is a microbusiness or sole trader, invoices equal salary.
Here, we have to be fair. More often than not, commissioning departments procure services in good faith. They behave respectfully, and pass invoices on receipt. It’s usually the finance department locking the moneybox so tightly that only stiff correspondence can prise it back open.
Some frustrated freelancers have even gone so far as to confront accounts staff openly with this question:
“If you didn’t receive your salary this month, what would you do?”
Simple, but effective. When finance departments are encouraged to understand that this isn’t just about shifting numbers on a balance sheet, but paying an actual human being who needs to meet their rent/mortgage/bills/feed themselves and their family – just as they do with their salary – the penny drops.
If that human being isn’t paid, there are very real consequences. They’ll either have to draw from their savings, losing interest; or extend their overdraft/apply for a loan/touch friends and family for cash until what they are owed finally comes through.
It’s interesting to note that at some point, just about every freelance creative I know has had to engage a debt collection agency or threaten Small Claims action against a serious evader (personally, I’ve had to do both).
Currently, the creative industry is battling two additional issues around payment: the phenomenon of working for free, and freelance service websites which drive down prices, creating a race to the bottom. Both of these also raise questions over the issue of quality.
A perception we are hobbyists
The challenge we face as creatives is a pervading perception that we are hobbyists. That we don’t need to be paid because ‘it isn’t a real job’, or that we’re willing to work for a derisory rate in return for ‘exposure’ or ‘credit’ (and even at the expense of rights grabs).
The cost of materials, tools or whatever we use to get the work done does not equate to our skill, experience and talent – often accrued from formal training and over many years in the job – or indeed, the time and care necessary to make that work.
This implies a need to promote the value of what we do and our professional status. It’s about ensuring people understand we’re serious about business – and leaving those who don’t want to behind.
How can we go about this?
- Find clients who appreciate what we do – and nurture them.
- Provide great service and encourage repeat business.
- Be the go-to person for our line of work.
- Avoid job websites that treat bidding for projects like the proverbial greasy pole.
Seth Godin is clear on this score, when he talks about people who aren’t prepared to pay what your service is worth: “They are not your clients.”
- If a client consistently pays unacceptably late or not at all, it’s time to get out the bargepole.
- Invoice promptly and regularly to ensure good cashflow – don’t let invoices pile up.
- Build credit control into the business to secure payment.
- Negotiate workable payment terms into contracts, and refuse unreasonable attempts to extend terms.
- Get paid in advance or in instalments, if possible.
- Put the relevant legislation on invoices, so bought ledger knows the consequences of late payment.
- Charge interest if the delay is significant – late payment is, after all, a debt.
These are practical measures; the problem of the work-for-free culture sneaking its way into the creative industry is more difficult to address.
What we can do is to be consistently good at what we do. Strive for excellence. Step outside of the low-rent price war. Become known for providing a level of quality and client care that the cheap suppliers racing to the bottom simply can’t match.
Above all, it’s about valuing ourselves enough to know our own worth. We are creative professionals, we are in business. And we deserve to be paid for what we do.